Baucus Releases New Tax Draft

As news of Chairman Baucus’s nomination came as a surprise to those monitoring the Finance Committee’s policy moves, the chairman released a new staff discussion draft on energy-related tax incentives and stated that he has more tax drafts to release after Congress returns from the holiday break in January. Under the proposal, over 40 existing energy tax incentives – including incentives for residential energy efficiency, electric plug-in vehicles, as well as oil and gas tax industry credits – would be eliminated and replaced with two new expanded credits for electricity and transportation fuel. The proposal, which would be effective starting in 2017, would phase out the new credits over a four-year period once the “greenhouse gas intensity” of the electricity generation or fuel declines to the point that it is 25 percent cleaner than it was in 2013, a metric that would be determined by new regulations set forth by the Environmental Protection Agency. Overall, the bill is expected to reduce current federal spending on all energy incentives of $150 billion over 10 years with the majority of the savings coming from the repeal of oil and gas industry tax incentives, as well as the provisions eliminated in the committee’s cost recovery and accounting draft. Finance Committee staff stated that the savings would be used to lower the corporate income tax rate (a 1 percent reduction is about $133 billion in savings). Committee staff declined to specify how many more drafts remain in the queue, or provide a timeline for how long they would continue to come out next year. For more information, please contact Brian Lenihan at (202) 547-4733 or lenihanb@agc.org.